Category: Academic Departments
Barton shares advice amid disastrous weather conditions
Winter 2015 has been a disaster for the Greater Boston area. From back-to-back blizzards to subfreezing temperatures, conditions have taken a serious toll on the city, particularly the MBTA. Service shutdowns, shuttle buses replacing trolleys, and severe delays have been abundant this season, causing headache-inducing commutes and safety issues. Somewhere in this wintry mess is a lesson to be learned—and Michelle Barton, assistant professor of organizational behavior at the School of Management, may have found it.
In a piece for BU Today, Barton offers her thoughts on how the MBTA should remedy their current crisis, and recommends taking an approach similar to organizations like nuclear power plants: take everyday glitches seriously, study them closely, and figure out how to anticipate them earlier next time.
Excerpts from BU Today:
If the MBTA wants to avoid another meltdown, it might want to take a cue from people who run nuclear power plants and other “high reliability organizations,” says Michelle Barton, a School of Management assistant professor of organizational behavior.
Operators of nuclear plants, aircraft carriers, and other highly complex systems are “very focused on noticing small discrepancies” before they become big problems, Barton says. “They treat their near misses as incredibly valuable information, as indicators of the health of their system. They say, ‘Yeah, OK, we did something right, because we avoided a disaster, but let’s look at what happened to begin with, what went wrong, how could we have caught that even earlier?’”
From an organizational perspective, Barton has some suggestions moving forward:
Close study and remedy of those everyday problems and near misses, like the nuclear plants and carriers, for starters. Barton relates a well-known story in her field, about a mechanic on an aircraft carrier who reported to his superiors that he had left a small tool on deck, and all flight operations were suspended until it was found. Instead of being punished for his mistake, the mechanic was rewarded for reporting it, thus clearing up a small problem that could have caused a big one later.
The media have been reporting that the MBTA has major plans for updating its fleet and for other expensive projects, Barton notes, “but what do you do in the meantime? How do you deal with the day-to-day glitches? Do you invest in continuing to maintain the system, or do you keep saying, it’s a small glitch, we got past it, so it’s fine, and we’ll fix it when we get to our next big cycle? High-reliability organizations and entrepreneurs and wildland firefighters don’t ignore those things and don’t wait for the natural stopping points.”
Barton says that she doesn’t know enough about the situation to say that the MBTA is not doing this, “but the signal goes out, how important is this, how much do we care, what are we going to do about it? So I think maybe the reason why in this case our transit system is experiencing so many problems is not because people weren’t aware of them or didn’t care; it’s because we made choices as to where to put our money, time, and effort. Whether they were good or bad choices I can’t say.”
Any ideas for what to do mid-crisis? Barton recommends looking for what’s working, like a particular system for plowing streets in one suburb, and spreading it around. Previous, routine solutions tend not to work in crises. Take note of solutions that are out there, even from new sources and people close to the problem: frontline workers, commuters, the private sector. “Put the emphasis not just on putting out fires,” she says, “but on a rapid cycle of learning. Find out what’s working and flood that through the system.”
Read the full piece here.
Photo by Cydney Scott
The upscale clothing company is a “marketer’s dream”
It’s difficult to go anywhere in winter without seeing someone wearing a Canada Goose coat. The puffy parkas with a small round patch on the sleeve and a hood trimmed with coyote fur can be spotted nearly everywhere—even on celebrities like Emma Stone. And their sales are on the rise, too: Fortune magazine reports that Canada Goose has seen revenues spike from $5 million to more than $200 million just in the last decade, with some experts predicting a rise to $300 million by the end of this year.
How did a clothing line that sells women’s coats for $745, hats for $245, and other items for up to $1,700 become so successful? Susan Fournier, School of Management Questrom Professor in Management and faculty director of the MBA program, says the Toronto-based company is a marketer’s dream. Fournier shared some marketing wisdom with BU Today that might explain how the retailer has grown in popularity and formed such strong relationships with its customers.
Excerpts from Fournier’s conversation with BU Today:
BU Today: Why is Canada Goose such a popular brand right now?
Fournier: I don’t have their marketing campaign in front of me. All I know is that their marketing comes from grassroots. They had a strong narrative, and then it started getting picked up by certain groups. People started to think about hardcore Canadians braving the cold, and so it became a fad and then transitioned from a fad into a strong brand. I think it’s mostly about that and keeping prices high, not going crazy with sublines like making lighter fall jackets, for instance. Also protecting distribution so they don’t show up at a discount store like TJ Maxx or an outlet. It’s that, being smart enough not to kill it.
So you’re saying that some brands damage what they have by expanding too fast?
I think that’s the case with tons of things. Burberry has come back now in popularity, but they were in danger for a while, and the same thing was true with Calvin Klein. They made their brands too available. If you’re going to be exclusive, availability—both distribution and pricing—is the opposite of that, so you have to balance that tension really carefully.
In a marketing campaign, you have the four Ps: product, place, price, and promotion. The pricing and the distribution are the most important for a brand like this. It’s growing, everyone wants it, so it’s hard to say, “Well, we’re not going to make it available for everyone,” because you always want to serve shareholders and make the largest profit.
Is price the main barrier for accessibility?
I think distribution, too. Barriers to accessibility would also be, “Can you get your hands on it?” You have to work a little harder to find it. This brand has exclusive distribution; it’s not everywhere. Those are two barriers.
There’s a lot of hardy outerwear out there—L.L. Bean, North Face, Patagonia. How have those brands convinced people that winter gear is fashionable and even a luxury item?
That’s interesting too. The North Face has grown hundreds and hundreds of percent over the last few years, and they could risk blowing the whole thing up. But people are still into their ultra down coats, so they are still hanging in there. But they’re kind of at that close edge.
At some point, many of these brands were only found in small communities, like L.L. Bean used to be for fishermen and hikers, but then they broadened. I think that’s step one; you start to shift the category frame that you think of this as. It’s not hard-core expedition wear, it’s about outer fashion. Outerwear is still outerwear, but you don’t have to go on an arctic expedition anymore.
Check out the full Q&A here.
From Kahn, S., Ceci, S., Ginther, D., Williams, W., (2014). Women in Academic Science: A Changing Landscape. Psychological Science in the Public Interest, 1-67.
History—and headlines—would lead one to believe that gender discrimination is at the root of women’s underrepresentation in scientific academic careers, particularly in math-intensive fields. This was certainly true in years gone by, but what about today?
According to a new paper by Shulamit Kahn, associate professor of markets, public policy and law at Boston University School of Management, that’s no longer the case. Outdated reports on the struggle of academic women still dominate the media, painting an inaccurate picture of current barriers to women’s participation in academic science. The image of a male-centric academy persists, but references to gender discrimination are no longer a valid cause of women’s underrepresentation in math-intensive fields.
Kahn’s paper, “Women in Academic Science: A Changing Landscape,” co-authored by Stephen Ceci and Wendy Williams of Cornell University and Donna Ginther of the University of Kansas, illustrates how times have changed: women in academic science are more likely to receive hiring offers than their male counterparts, are paid comparably to men in most cases, are tenured and promoted at the same rate, persisted in their jobs comparably, and had their grants funded and articles accepted as often. There are exceptions, of course—in certain fields like economics and biology, women are receiving less than their due—but Kahn’s paper reveals that academic science today shows greater equality than ever before.
What proves to have a greater impact on women’s full participation in mathematically intensive fields are “pre-college factors and the subsequent likelihood of majoring in these fields.” The authors’ extensive life-course analyses indicate that adolescent girls express less interest in careers like engineering and computer science than boys, and are less likely to declare college majors in math-intensive fields in high school. Although girls earn higher grades throughout schooling in virtually all subjects, they are less likely to take AP courses like Calculus BC and Physics. Kahn and her co-authors find, however, that if girls do take introductory science courses in college, they excel and are more likely than males to switch into science majors, especially if their instructors are women.
“We have to get girls to start thinking of themselves as mathematicians and physics-lovers early on, because they can have great academic careers in these fields,” Kahn says. ”Surprising to many, the women who major in fields like engineering and physical sciences are likely to enter and succeed in academia and are equally happy as men in their jobs.”
Kahn’s paper suggests that rather than misdirect attention toward historical barriers that no longer account for women’s underrepresentation in academic science, future research should focus on the early-stage barriers that girls face, such as a lack of encouragement in high school to pursue math-based degrees. The conversation must change.
Despite the bleak scene that the media has created (one based on decades-old data), women today are thriving in academic science, according to Kahn and her co-authors. Gender bias in math-intensive fields? That’s a thing of the past.
“Women in Academic Science: A Changing Landscape” appears this month in Psychological Science in the Public Interest.
Article references Buffa’s work on fund manager contracts and equilibrium asset prices
Assistant Professor of Finance Andrea Buffa is cited in The Economist for his new paper on asset management contracts and equilibrium prices. Co-written with Dimitri Vayanos and Paul Woolley of the London School of Economics, Buffa’s paper sheds light on the “low beta anomaly” in markets that The Economist believes is a result of how investors choose fund managers.
“Most financial assets these days are not held directly by investors but by professional fund managers on their behalf,” the article states. “And that separation may explain a couple of big anomalies that undermine belief in the efficiency of markets.”
One of those anomalies, according to The Economist, is that greater risk demands greater reward. In practice, this old rule of thumb doesn’t hold up: less volatile (low beta) stocks have offered far higher returns than the theory would suggest. Buffa and his coauthors provide reasoning that explains this “low beta anomaly.”
The Economist references their findings:
Investors judge fund managers by how successful they are relative to their peers, and to benchmarks such as the S&P 500 index. They reward “star” managers who have been successful in the past, giving them new funds to manage and taking money away from poor performers. This new money will be invested in the stocks the managers concerned favour, which are highly likely to be those that have recently performed well (that is why the managers are stars). Such shares will therefore continue to rise in price, which helps explain the momentum effect.
But fund managers also need to worry about underperforming the benchmark, since that will cause them to lose clients. The greatest risk is to have an underweight position in a big company that is rapidly rising in price (5% of the portfolio in a stock that is 10% of the index, for example). If such a stock rises (perhaps because of good news such as higher-than-expected profits), the distance from the benchmark grows. So underperforming fund managers will be under pressure to increase their holdings in such stocks, even if they consider them overvalued (this happened during the dotcom boom).
For success in business and life, a network of developers is key
Time was when the right training, a promising job opportunity, and the support of a senior colleague were enough to advance in your career. Those days are gone.
In a world where, at every moment, the economy is globalizing, technology is developing, and the workplace is changing, it takes much more to achieve success, regardless of the industry. To keep pace with these current realities, making relationships through which we can learn new skills, develop new opportunities, and build effective collaborations is essential, according to Kathy Kram, Richard C. Shipley Professor in Management at Boston University School of Management.
Kram and Wendy Murphy, associate professor of management at Babson College, have published a new book titled Strategic Relationships at Work: Creating Your Circle of Mentors, Sponsors, and Peers for Success in Business and Life (McGraw-Hill), which provides guidelines for building relationships that are crucial to personal success. The book draws upon 30 years of research to offer practical advice on mentoring, coaching, mentoring circles, and developmental networks—advice that is key to staying ahead in an environment with ever-shifting trends.
“These trends make us all novices over and over again as we necessarily move to a new job, new organization, or new country,” Kram says. “It’s almost impossible to be an expert for very long.”
This is where supportive work relationships play a critical role.
“Finding a mentor is no longer sufficient,” Kram says. “Instead, each of us has to build a network of developers that can help us to continuously learn, innovate, and work with others.”
In three parts, Strategic Relationships at Work gives readers a guide to identifying high-quality relationships, how to build them, and what to do when they go awry.
The first part of the book provides an overview of what makes for high-quality relationships and gives the reader a number of assessment tools to create a personal strategy for building an effective circle of mentors, sponsors, and peers. Kram and Murphy argue that you must first know yourself—your values, goals, interests, talents and limitations—before you can begin to build supportive relationships. Once this self-knowledge is developed, it’s up to you to assess whether you have relationships in place that can help you achieve your aspirations.
From there, the authors offer strategies for building different types of relationships and invites those in leadership positions to foster developmental relationships in their organizations through formal programs, their own efforts to build effective alliances, and rewarding others for doing so.
What if things sour? When is it time to “break up” with your mentor? The third part of the book outlines how to end a relationship that has gone awry to minimize negative impact on your career. Via case examples of “tor-mentors,” Kram and Murphy illustrate the “red flags” that suggest when a relationship is no longer mutually beneficial, and offer specific communication tactics for ending it and moving on.
With this book in hand,” Kram says, “you will be able to form mutually rewarding relationships at work, create strong connections with meaning and purpose, and experience greater satisfaction and success—in business and life.”
Strategic Relationships at Work: Creating Your Circle of Mentors, Sponsors, and Peers for Success in Business and Life is available for purchase here.
From Restuccia, J., Mohr, D., Meterko, M., Stolzmann, K., Kaboli, P., (2014). The Association of Hospital Characteristics and Quality Improvement Activities in Inpatient Medical Services. Journal of General Internal Medicine, 5(29), 715-722.
All eyes have been on health care in the US as of late, with the quality of its services under much scrutiny. Deficiencies in patient care have been well reported and documented, but knowledge is scant about the degree to which hospitals are implementing systematic actions or practices to remedy the situation.
A new paper by Joseph Restuccia, Boston University School of Management professor of operations and technology management and dean’s research fellow, investigates the extent to which hospitals are engaging in quality improvement activities (QIAs), or factors influencing the extent of QIAs—data-guided activities designed to bring about immediate improvement in health care delivery. Co-authored by David Mohr, Mark Meterko, Kelly Stolzmann, and Peter Kaboli, the paper, “The Association of Hospital Characteristics and Quality Improvement Activities in Inpatient Medical Services,” appears this month in the Journal of General Internal Medicine.
The group specifically sought to identify the level of QIAs in the Veterans Administration’s (VA) 124 acute care hospitals, as well as factors associated with widespread adoption of QIAs, particularly the use of hospitalists (physicians who specialize in the practice of hospital medicine), non-physician providers, and the extent of goal alignment between senior managers and the inpatient service on commitment to quality. They identified 27 QIAs and classify them in three separate domains:
- Prevention: activities to prevent adverse reactions among patients, such as contracting bedsores or other infections
- Information-gathering: activities to improve the hospital’s knowledge base to improve quality, such as learning best practices within or outside industry, or conducting a management walkaround to raise awareness of the state of the institution
- Infrastructure: the basis on which you can build quality improvement programs and evidence-based practice guidelines; clinicians meet to discuss a topic of interest
Their study of the VA, the largest integrated health system in the US, resulted in three major findings. First, of the three domains, VA hospitals have devoted the most substantial effort to prevention-related QIAs to date. Second, where there is a close alignment of goals between senior managers and inpatient medical service leadership, there is a greater likelihood of QIA use. Finally, medical centers that employ hospitalists display the highest QIA-adoption rates across all three categories.
For senior leaders and clinicians, a key takeaway from the study is the importance of effectively communicating goals and aligning them throughout the organization, a significant factor in improving quality of care.
Read “The Association of Hospital Characteristics and Quality Improvement Activities in Inpatient Medical Services” here.
Boston University School of Management Professors Yrjo Koskinen and Rui Albuquerque, along with Art Durnev, associate professor of finance at the University of Iowa, have been awarded the 2014 Standard Life Investments prize for best paper in the European Corporate Governance Institute’s (ECGI) Finance Working Paper series. This annual prize, sponsored by global asset manager Standard Life Investments, was awarded for their research paper in which they create an industry equilibrium model where firms can choose to engage in corporate social responsibility (CSR) activities.
As part of the 2014 ECGI Working Paper Competition, Koskinen and Albuquerque were presented the award at a ceremony held at the Royal Academy of Belgium in Brussels. The professors’ paper was chosen from 53 others published in the ECGI’s finance series, making this year’s selection the most competitive to date, according to ECGI director of communications Jeremy Miller.
“It’s a great honor to receive the best finance paper award from the ECGI,” says Albuquerque, associate professor of finance and dean’s research fellow. “Being selected as the top paper among the best papers in the profession that make it to the ECGI list is incredible validation of this work by both peers and industry leaders.”
Their paper, “Corporate Social Responsibility and Firm Risk: Theory and Empirical Evidence,” models CSR activities as an investment in customer loyalty and shows that CSR decreases systematic risk and increases firm value. The award represents CSR’s growing relevance among finance scholars, which, according to Koskinen, is a significant achievement.
“CSR as a topic has received scant attention from the academic finance community,” says Koskinen, assistant professor of finance. “As our results show, CSR has lowered cost of capital for many firms and thus created value for shareholders. CSR is too important of a topic to be ignored. This recognition certainly encourages us to keep working on the topic.”
The professors’ paper was previously awarded a research grant by the BSI Gamma Foundation in 2012, as well as the best paper award at the inaugural Geneva Summit on Sustainable Finance in 2013.
Founded in 2002, the ECGI is an international scientific non-profit association that provides a forum for debate and dialogue between academics, legislators, and practitioners, focusing on major corporate governance issues. Standard Life Investments is a leading asset manager that manages $311.1 billion on behalf of clients worldwide. It has sponsored the Finance Prize for best paper since 2005.
Fournier outlines steps to getting more value out of social media brand-chatter
Last month, Susan Fournier, Questrom Professor in Management and professor of marketing, advised marketers in the Harvard Business Review: Think like an anthropologist. Instead of breaking down big data into percentages and meaningless numbers, tap into social media chatter to get a real glimpse into how consumers are living and thinking. A single comment or photo posted about a company’s product can impact its consumer knowledge and its profitability—don’t ignore it.
In a follow-up to her piece on this anthropological approach to big data, Fournier, once again in collaboration with Bob Rietveld, managing director and cofounder of Oxyme, delves deeper into the value of social listening and offers further instruction: Think like a market researcher. The information gained from social listening can be as robust a source of strategic inspiration as any must-have diagnostics on the dashboard, the pair writes. Not to mention, social listening is inexpensive and efficient, because surveying is unnecessary: unsolicited comments from consumers are already out there, awaiting analysis.
Fournier and Rietveld outline four steps to getting more value out of social media brand-chatter:
Make sure the quality of your social-listening data is good.
Like all data, the information you glean from social media should be subject to market-research protocols for reliability and validity. Ask the same kinds of tough questions you’d ask about any research project. Are the data drawn from the entire social-media landscape? Is the sampling of comments statistically sound? Is the system of data classification, in terms of topics, themes, and sentiments, accurate? Does your automated coding allow for idiomatic meanings, as in “This brand is the s—t”? The insights you get from social media are only as good as the data set you create.
Don’t make your social-media data stand alone.
Information from social listening must be correlated with other streams of data that the company is using. For example, in an analysis we performed for a transport company, we found that complaints shared on daily Twitter feeds tracked 90% with the content of customer-service comments registered by phone or mail. Linkages like this go a long way toward speeding the adoption of social-media data as a valid strategic-insight source.
Think about “impact” and not just ROI.
Marketing managers tend to take too narrow a view of social listening, seeing it merely as a way to measure the return on investment of specific marketing campaigns. For example, an electric-toothbrush maker that had launched a campaign to woo “non-electric” brushers was dismayed to learn that the resulting burst of social-media activity came mostly from existing users. It branded the campaign a flop and moved on.
In so doing, the company overlooked the value of what it had found on social-media sites. Users were sharing positive stories, advocating electric brushing, and in some cases expressing their love of the company’s brand. The company was getting a rare unfiltered look at how consumers were living the impact of the company’s strategies and brands.
Be sure your social-listening analyses make their way out of the marketing-research department
and into the wider organization, including leadership circles. Don’t let the information stay bottled up in the departments that collected and “own” the data. That means establishing a common analytical currency and language throughout the company so that managers can take action and be held accountable. One company we worked with created a Center for Digital Excellence to coordinate data on a vast brand portfolio. The company tied the digital indicators to bonus compensations, signaling C-level commitment to the program. It’s that kind of high-level integration that enables companies to focus efforts and resources effectively, creating value for the firm.
View the full piece here.
Real value is created through meaningful innovation and adoption—not from smoke and mirror deception
Mark T. Williams, Boston University School of Management executive-in-residence and master lecturer of finance, warns against the peer-to-peer electronic payment network Bitcoin in a wide range of media commentary, arguing that investors across the globe should steer clear of this “dangerous speculative bubble” and its “get-rich-quick mindset.”
Excerpts from Williams’s commentary for WBUR (Dec. 5, 2013):
Bitcoin is not a futuristic currency but a speculative mania. Greed is pushing prices skyward but fear will quickly bring those same prices crashing back to earth. Investors need to separate the promising technological innovation of digital currency from the Bitcoin Ponzi scheme that will harm those that fail to exit before the bottom falls out.
Bitcoin is another example of “market innovation” that deserves closer scrutiny from the Securities and Exchange Commission. SEC Chairman Mary Jo White has said virtual currency itself may not be considered a “security,” but interest issued or returns gained by it likely would be and therefore subject to regulation. Federal Reserve Chairman Ben Bernanke told Congress that the Fed “does not necessarily have authority to directly supervise or regulate these innovations.” And the Justice Department says Bitcoin is legal, but that doesn’t mean it is adequately market tested, investment safe and ready to be a global currency.
Bitcoin is not a currency with intrinsic value but a hyper bubble fueled by a get-rich-quick mindset.
Excerpts from The Washington Post blog “The Switch” (Dec. 10. 2013):
In recent weeks, some Bitcoin critics have been rethinking their initial Bitcoin skepticism. But others are as convinced as ever that the cryptocurrency is doomed. One of the harshest critics is Mark Williams, who teaches finance at the Boston University School of Management. He predicts that in the first half of 2014, bitcoins will lose almost 99 percent of their value, falling below $10.
Timothy B. Lee: What informs your thinking about the future of Bitcoin?
Mark Williams: I used to be the senior vice president of a commodity trading firm in Boston. I’m very familiar with commodity prices with high volatility. For example, energy prices would have swings of 400 to 500 percent in a year. That’s significant price movement.
But Bitcoin is in a universe of its own. Right now Bitcoin is looking at price movements as high as 8000 percent since January. It moved from $13 per bitcoin to a high of $1200. So what we see then is considerable risk associated with Bitcoin.
At least with a commodity like power, natural gas or oil, there’s an underlying value. That product can be used for something. With Bitcoin, it’s a virtual commodity, so there’s no backing. In essence, Bitcoin is worth something as long as you or I are willing to sell things for it. But if you say I’d rather have $1,000 than a bitcoin, Bitcoin is going to drop like a rock.
Excerpt from Williams’s interview on “Bitcoin’s future in Europe and the US” for The Voice of Russia (Dec. 20, 2013):
Bitcoin…has too much movement to be used as a medium of exchange….With any currency, you have to have trust in that currency, and you have to have stability….In the last two weeks, we’ve seen a drop of almost 50%. It’s almost like a roller-coaster out of control.
Srinivasan on effective subject lines in email marketing
Email marketing is a key strategy for retailers looking to spread the word about holiday shopping deals. But not just any email, Erika Morphy writes in CRM Buyer—mobile email. A full 48 percent of email is now opened on a mobile device, according to Ashley Twist, senior innovation strategist of mobility at Engauge. Now more than ever, consumers are using their mobile devices in stores for last-minute product research, including email offers from local merchants, the pieces notes.
In order to provide a high-quality mobile experience for consumers, marketers must be familiar with the best practices in mobile email marketing, particularly with crafting an effective subject line, on which Boston University School of Management professor of marketing Shuba Srinivasan weighs in:
“Subject lines make the first impression,” Boston University professor Shuba Srinivasan told CRM Buyer. “They need to be inviting enough to not give away the whole email, concise enough that they fit on the screen of all devices and clear enough that people know why you’re sending an email.”
Read the full piece here.